06 January 2015

EU Commission joins Grexit debate

The EU Commission stressed on Monday that according to the EU treaties a Greek exit from the Eurozone is not possible. If that's the case there is no means to put pressure on states to reform, some commentators write. Others believe the Union has no option but to grant Greece a complete debt write-down.

Forced euro exit must be possible

The EU must stop being indulgent with member states that are unwilling to introduce reforms, the liberal-conservative daily Neue Zürcher Zeitung writes, calling for serious discussion on expelling countries from the euro system: "It would be good if we stopped believing that there were no alternative to all member states remaining in the Eurozone. Because as long as this remains the case, calls for structural reforms and financial moderation will face an inherent incentive problem. For years there has been a silent consensus within the Eurozone that members will be carried along by the transfer union even if their policies run counter to the Stability Pact. For years the consequences of such frivolity have been clearly visible in France and Italy. Although both countries have failed to reduce their deficits and their debt, they have always been able to count on the indulgence of the other member states. It's no surprise that this does little to strengthen their will to reform."

Only debt haircut can save monetary union

Europe must finally admit that the high repayment obligations for crisis countries like Greece cannot be met and that only a debt write-down can help, the left-liberal daily The Guardian warns: "If Europe wants to save not only its currency but also its economy, it must agree, first, to give its central bank the explicit authority to do what it takes, and then to negotiate a fresh and substantial reduction in the south's debt obligations to the sort of levels which it has historically been possible to service. Europe was, in the cliche of the crisis, able to kick the can further down the road than many thought possible. But 2015 could be the year where there is simply no further to kick - the point where Europe has run out of road."

Grexit debate hindering ECB bond purchases

The debate over a Grexit calls the ECB's bond-buying programme into question and therefore poses a risk for all Europe, the left-liberal daily La Repubblica concludes: "The danger of the re-nationalisation of monetary policy as a result of a Greek exit from the Eurozone could prompt the ECB's governing council to postpone the decision on the announced measures once more. But Europe's economy can't afford another delay in the ECB's shock therapy. This perhaps explains why the European Commission yesterday went as far as to say that euro membership was irrevocable. ... Particularly since for ECB chief Mario Draghi, little Greece may prove to be a far more tricky hurdle than the opposition of the big Bundesbank. If the battle between Athens and Brussels immobilises the ECB, the damage Greece inflicts on Europe will indeed be immeasurable."

Real strategy lacking in economic policy

The economic crises of the recent years should have led to a clear course on the basic economic policy issues, the left-liberal daily Delo writes. But in view of the renewed debate over a Grexit the paper notes with disappointment that this hasn't been the case: "Even states like the US and the UK, which have recovered since the Lehman Brothers bank debacle and Greece's gigantic deficit, don't have any real answers - not to mention countries like Japan which have been trying to get back on their feet for decades. The same goes for Europe: while the left in Greece is reasserting itself in anticipation of a victory for the Syriza party, Germany's conservatives are warning of the consequences [of a Grexit]. Even if Syriza's leader Alexis Tsipras sees his victory as the start of urgently needed changes in all Europe, Germany is indicating that without economic reforms and repayment of its debts his country is moving closer and closer to the drachma."